Emera Inc (EMA) 2014 Q1 法說會逐字稿

Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Emera Q1 2014 analyst conference call. All lines have been placed on mute to prevent any background noise. (Operator Instructions). I will now turn the call over to Miss Jill Hennigar, Director of Investor Relations.

Thank you, Rob. Good afternoon, everyone, and thank you for joining us for our first quarter conference call this afternoon. Joining me from Emera are Chris Huskilson, President and Chief Executive Officer, Scott Balfour, EVP and Chief Financial Officer and other members of the management team.

Emera's first quarter earnings release was distributed earlier today via newswire and the financial statements and managements discussion and analysis are available on our web site at www.emera.com. This afternoon, Chris will begin with the corporate update and then Scott will review the financial results in detail. We expect the presentation segment to last about ten minutes, after which we will be happy to take questions from analysts and investors.

Please note that all amounts are in Canadian dollars, the exception of Emera's main and Caribbean Utilities, where segment results are reported in USdollars.

I'll take a moment to remind you that this conference call may contain forward-looking informationwhich involves certain assumptions and known and unknown risks and uncertainties that may cause actual results to be materially different from those that are expressed or implied by the comments. Those risks include, but are not limited to, weather, commodity prices, interest rates, foreign exchange, regulatory requirements, and general economic conditions. In addition, please note that this conference is being widely disseminated via live web case now I'll turn things over to Chris.

Thank you, Jill, and good afternoon, everyone. Emera had a great start to the year. Net income for Q1 2014 was CAD202.8 million, or $1.43 per share, compared to CAD122.8 million, or $0.93 per share in Q1 of 2013. Scott will take you through the details of the quarter later in his remarks.

All of the businesses performed well this quarter but our strong Q1 results were really attributable to how our non-utility businesses performed.

Beginning with Emera Energy, our marketing and trading business drew on a strong foundation it has built over the last decade to successfully manage through a very cold and volatile winter. We have an extensive network of counter parties from which to source and sell gas, which now includes an expanding Marcellus presence. That provides access to low cost supply. Strategic investments in short-term transportation capacity enabled us to move gas from low price to high price points and our comprehensive knowledge of the pipeline networks on which we operate, provided significant opportunities to optimise positions. We've owned our three New England gas plants for five months now and I'm pleased to say that so far, the portfolio is performing as we expected.

Operationally, the plants performed well in the quarter, with an availability factor of over 90%. We're pleased to have executed a 20 year service agreement with Siemens for Bridgeport Energy. This comprehensive maintenance and capital support agreement provides cost certainty to the facility over the term for maintenance, and provision of parts. It ensures access to skilled personnel and includes upgrades that will add approximately 35 megawatts to the plant's capacity by Q2 of 2015.

Over the past few months, there have been positive changes in the New England market. There is now a New England wide initiative focused on a set of related goals, reducing dependents on natural gas, increasing supply of natural gas and transmission to avoid the price impact of system bottlenecks, and increasing supply of clean electricity for supply diversity and decreased GHG emissions.

Massachusetts is focusing to meet its 2020 GHG reduction targets which will likely include significant clean power imports. The state is currently introducing legislation compelling the distribution utilities to solicit proposals for 19 terawatt hours annually of clean energy.

Hydro imports from Canada are expected to be lower cost in both Canadian hydro and wind are eligible. This solicitation along with recent renewable energy RFPs in New England will continue to expose transmission constraints, and we believe our Northeast Energy Link project will be well positioned to provide a solution to that congestion.

The last couple of Winters have highlighted gas constraint issues right here in the Maritimes. Sable gas is in decline and although Deep Panuke recently started production, it has an estimated life of about ten years. We've not seen any new activity for offshore gas in the Maritime and the New Brunswick shale gas resource is currently unknown.

With these challenges ahead of us, we feel there is an opportunity to secure more stable gas supply to the region. Emera has recently made this a business development focus and as a team is looking into future solutions.

The Maritime link continues forward and construction is well under way. Phase 1 of our tree clearing is complete in both Newfoundland and Nova Scotia, and later this year we'll begin the construction of the transmission lines and award the converter and substation supply contracts. Overall, supplier interest in the project has been very strong, creating strong competition for contract negotiations.

We recently raised CAD1.3 billion of debt for the project at a coupon interest rate of 3.5%, with all costs considered that turns into 3.85%.

Utilizing the benefit of the federal government's AAA credit rating through the backing of the federal loan guarantee, this issuance will save Nova Scotia electricity customers approximately CAD325 million over the life of the Maritime Link. This represents a larger savings, and improves the business case presented to the Nova Scotia Utility and Review Board.

At Nova Scotia Power, our implementation of productivity initiatives and cost control measures resulted in the utility not requiring a general rate application for 2015. Nova Scotia Power remains focused on customer affordability and reliability and has also proposed no fuel cost increase for 2015.

In the Caribbean we continue to focus on affordability and fuel cost stability in that region. In Grand Bahama we have been able to keep the monthly fuel charge below CAD0.16 for almost a year, through operating efficiencies and the commissioning of our 52 megawatt West Sunrise power plant. Reliability on the island has improved over 50%. And we're now also initiating a fuel hedging program which will also create more stability and predictability for customers.

In Barbados the integrated resource plan has been approved by our regulator. The plan incorporates more renewable energy development and we started the process to build an 8-megawatt utility scale solar plant, and a small wind farm. The solar plant will be followed by approximately 50 megawatts of dual fired natural gas and oil generation staged over four years. As a result of this new generation, inefficient steam and gas turbines will be retired ultimately resulting in lower all-in cost for customers.

Before I turn things over to Scott, I want to thank John McLannan, the Chair of Emera's Board of Directors, who will step down as chair tomorrow at our AGM. John has been Chair of the Board for five years and has provided leadership and counsel to both myself and our management team. Emera has experienced a period of significant growth under his chairmanship. John is stepping down as Chair but we'll glad he will be continuing to provide us leadership and support as a Director. Jackie Sheppard will assume the role of Chair, and has been a Director since 2009. Jackie also sits on the board of Emera Newfoundland & Labrador. Jackie has extensive knowledge in the energy industry, and in senior leadership roles. She has been a valuable member of the Board, and I look forward to working with her as we move the Company into the future.

With that, I'll turn things over to Scott, who will give you a more detailed update on our financial results.

Thank you, Chris, and good afternoon, everyone. Our first quarter results were released earlier today and are now on the Emera web site. As Chris mentioned earlier, America's consolidated debt income for the first quarter of 2014 was CAD202.8 million or $1.43 per share, compared to CAD122.8 million or $0.93 per share in the first quarter of 2013.

When the Q1 results are normalized from mark-to-market gains, adjusted net income was CAD146.6 million, or $1.03 per share, compared to CAD115.4 million, or $0.88 per share last year.

The CAD31.2 million increase in adjusted net income is primarily due to the increased contributions from the Emera Energies marketing and trading activities, and the New England gas plants.

Also to note, adjusted net income in the first quarter of 2013 included CAD18.1 million of after tax gains in the conversion of Algonquin sub-receipts, and a CAD6.8 million after tax gain from Emera's interest in a settlement received by Northeast Wind Partners. There were no similar gains recognized in the first quarter of this year.

Operating revenues increased CAD412.2 million to CAD1.05 billion in the first quarter of 2014, compared to CAD638.1 million in the first quarter of 2013. This increase is primarily due to our 2013 acquisitions of the New England gas generating facilities, Brooklyn Energy, and 41.8% interest in Domlec.

Turning now to our segmented results, Nova Scotia Power contributed $66.8 million to consolidated net income in the first quarter 2014 compared to $63.2 million in the first quarter of 2013. The increase in the quarter was primarily due to increased residential sales and decreased income tax expense due to higher pension contributions for 2014, decreased regulatory amortization, and these impacts also reduced the utilization of NSPI's rate stabilization deferral. In 2014, we expect NSPI to earn within its allowed rate of return, and to have earnings generally consistent with 2013.

Before I speak to Emera Energy's results, you probably noticed that our former services renewables and other investments segments in MD&A have now broken into two sections;Emera Energy, and Corporate and Other. Emera Energy has grown to a size where we believe segregating it's results provides better insight into how that business, and our business is performing.

Emera Energy had an exceptional start to 2014, delivering Q1 adjusted net income of $61 million, compared to $23.3 million in the first quarter of 2013. As Chris mentioned earlier, Emera Energy's marketing and trading business was well positioned to take advantage of the cold weather, and weather volatility that created favorable market conditions. As we move back to warmer weather, and volatility is reduced, we expect results to move back towards more normal ranges.

We continue to believe the businesses is of a scale now that it generally can be expected to provide CAD15 million to CAD20 million in after tax earnings annually and position itself to make the most of opportunities as they present themselves, while maintaining an appropriate risk profile.

Emera main contributed CAD10.4 million to consolidated net income in the first quarter 2014 compared to CAD8.9 million for the same period last year. The higher net income was primarily due to increased operating revenues and the stronger USdollar quarter-over-quarter.

Pipelines delivered consistent net income year-over-year contributing CAD7.2 million in the first quarter for both 2014 and 2013.

Emera Caribbean contributed CAD6.6 million to consolidated net income for the first quarter 2014 compared to CAD4.4 million last year. The increase was primarily due to decreased operational costs in Grand Bahama Power Company, a strong US dollar quarter-over-quarter, and higher electric margin.

Looking ahead, our earnings per share growth target of 4% to 6% over the medium and longer term remains intact. That's all for my financial overview and we would now be happy to take your questions.

(Operator Instructions). Your first question comes from the line of Ben Pham, from BMO. Your line is open.

Thank you. Good afternoon everybody. Good quarter. Just going back to your commentary on Emera Energy on that CAD15 million to CAD20 million of after tax earnings. Do you expect that to grow over time? How should we look at that segment in your overall five-year guidance?

So, Ben it's Judy. I would say that a year and a half ago, to two years ago, the guidance on our business was CAD5 million to CAD10 million, so I think that what we're trying to provide is people with is kind of a base level of what they might expect it can predictably deliver. So that's the CAD15 million to CAD20 million net earnings number. I would say from time to time, like in the Q1 of 2014, we would have opportunities to do better than that. But, the growth rate on the CAD15 million to CAD20 million would be, I would think of that as kind of a more standard organic growth rate of 5% or whatever we would be able to add to the business just in the normal course in any given year. So, obviously, we're not trying to reflect unprecedented market conditions in our earnings predictions here.

Okay. Thanks for that, Judy. And you also talked about expanding in the Marcellus with Emera Energy. Is there any other geographies or market centers that you're looking to get into?

We do have some very significant relationships with producers out of Marcellus. So we continue to look there, and we're also now looking in the Utica play to see if we can kind of stick our toe in the water there as well and kind of do there what we did in Marcellus. And with respect to the rest of the business, we continue to try to grow it kind of one pipeline leg and one customer at a time. So, that's the strategy, and so far it has worked well for us.

Okay. And just last, I just wanted to go back on the New England acquisition, the three plants. I know it's been a quarter and a bit, but just from what you have seen with spark spreads, your guidance for EPS accretion has that changed at all since the time you announced the acquisition?

We're not changing our guidance. The plants are kind of living up to our acquisition model so far. But, as I say, we're five months into that, so we're not changing our guidance at this point in time. The way we talked about the plants when we acquired them was they would be modestly accretive including all of our tax benefits that we could utilize. To be clear, that's still, you know, we would expect maybe $15 million of earnings from the plants, so I don't want anybody to think that the earnings level is really low, but the accretion will be kind of around the one to two pennies for the next little while. I'll remind you that we have a little bump coming in 2017, 2018, because of the increase in the capacity payment that we'll be getting in New England, so that was a nice pleasant surprise that came after the acquisition. But so far, six months in, we're still managing our own and assessing our own progress against our original expectations in our acquisition model.

And I think Ben the other thing to add on the power plant side is that level of volatility that we saw this winter, is not really good for the power plants. It's very difficult for them to keep up in those kind of markets, and so we were comfortable with the way they performed. But you wouldn't say that they did very, very well in that market. That level of volatility, as I said, is hard to follow.

Okay. Great. That's it for me. Thanks, everybody.

Thank you.

Your next question comes from the line of Linda Ezergailis, from TD Securities. Your line is open.

Thank you. I just have a question about trying to gauge the full impact of your training and marketing margin. What sort of incentive compensation should we deduct and what sort of tax rate to get to kind of a bottom line impact?

So I would say a 35% tax rate is a reasonable estimate. I don't want to give the specifics, frankly, of our compensation arrangements, but they're EBITDA based, I get I'll say that, and somewhere in a range of 10% to 20%.

I think, Judy, those are reported into the existing cost basis.

Right.

It's not something that will come at the end of the year, it's something that's accrued through the year.

So Linda, for example, the OM&G in the trading business now includes an accrual for what would be owing to reflect the margin level that was achieved.

Okay. So the compensation would be 10% to 20% of EBIT?

I don't want to be more specific on that.

Okay. Thank you. And that would explain I guess the bulk of the increase that we saw in that segment in the OM&G year-over-year.

Yes.

Okay. Thank you. And then, can you maybe walk us through the main Public Utility Commission reprocessing of your application and appeal there that's been punted back by the courts to there -- how long that process will take and what the book ends of outcome might be?

So, the appeal Court in Maine did, basically, send the decision of the MPUC back to the MPUC. They vacated the decision and asked them to re-look at the question. They were quite narrow in terms of their direction about what issues had to be addressed. We're now in the middle of a regulatory process there. Emera filed briefs, interveners filed briefs on last Friday, May 2, and now the process is that on May the 13th everybody will have an opportunity to respond to everybody else's briefs. So, I can't predict the outcome. What I will say is I think the MPUC has made it clear that it's in everyone's interests for the process to be as expeditious as is reasonably possible, and so far the way the schedule has been set out and the way people have been responding to it, that seems to indicate that's the general view of the group. So we continue to be optimistic about the outcome. We feel that, you know, our position is a reasonable one and we have confidence in it and we would expect ultimately when it's resolved that there will be a way forward for us to continue to invest in Maine.

Okay. That's helpful. Thank you. And just one clean up question. A big increase in your working capital in the quarter. How much of that would be related to higher pricing of your trading volumes versus just a systematically higher level of activity that will continue?

So it would be materially a function of price. In terms of volume of business, the volumes themselves, probably somewhere 35% to 40% higher, but on last year's volume wouldn't account for the differential. I do remind every body, if they don't know it, one nice thing about the energy business is that things settle promptly on the 25th of the next month so there's no such thing as an aged receivables list. So working capital does tend to move with the price, but the exposure is very tightly controlled in the industry.

Great. Thank you.

Thanks, Linda.

And your next question comes from the line of Paul Lechem from CIBC. Your line is open.

Thank you. Good afternoon. Sorry to belabor this, I just want to go back on the energy guidance you gave us, the 15 to 20. Judy, I think I heard you say that the generation facilities in New England you're expecting around CAD15 million in earnings from those alone. I'm just trying to square that away with that division overall.

Sorry, I was only speaking on the 15 to 20, Paul, with respect to the trading and marketing side. So, the plants would be on top of that.

Okay.

And I guess just in case anybody (inaudible), that wouldn't be the 2015 expectation, of course. I don't want anybody to think that we're planning to lose a bunch of money between now and the end of the year. What I'm trying to give is a base level of expectation for the business in circumstances when we don't have these unprecedented market conditions.

Okay. So the 15 to 20 is net income after tax for the energy trading part of it, alone?

Yes.

Okay. And in a normal year, seasonality would it still be skewed heavily to Q1?

You know, it's interesting, I looked at that question recently and the seasonality, the only real seasonality is that Q2 is traditionally the weakest. So , Q1 and Q4 are effectively winter seasons, and Q3, depending on the weather, can also be a very busy time. So, the real seasonality is that Q2 tends to be weak.

Okay. Just wanted to circle back to some comments Chris made in his introductory comments around business development activities on the gas pipe side, I guess, into the region. Just wondering what kind of things you're looking at, what kind of opportunities there are and expansion of Maritime to northeast, are you looking to get involved with other partners? I know Spectra has some projects that they talked about. Maybe could you give us some color in terms of what kind of opportunities you're looking at in that region?

I think, Paul, it comes back to the question of where are we going to get gas a decade from now in our marketplace. And, you know, if you look at it, there are really probably three fundamental opportunities from that perspective. One is we could see more activity in the Nova Scotia offshore and there are significant discoveries that could be brought on, but there's been no initiative to actually make that happen at this point. So that's uncertain, but that's something that we have to keep in mind. The second thing would be that there is onshore shale existing in the Maritimes, and you know, decisions of governments and policy makers will guide whether or not that shale is explored and/or developed.

And so, that's another possibility, and one that we have to keep our eyes on. And then lastly, being able to bring gas out of western part of North America, and doing that in the most efficient and effective way is the other thing that we can do. And so whether that's as near as the Marcellus region, or as far away as some of the more distant regions, I don't think that's clear. It depends on pipe access and the effectiveness of some of what's happening in the region, in general. But if it's something to do with the a Maritimes northeast pipeline we would participate on our 12.9% pro rata share of those particular type investments. And, you know, we're very interested and excited about what Massachusetts is talking about right now, or Massachusetts and New England in general. The governor's of New England have decided they want to bring somewhere around a billion cubic feet of additional transport to bear in that region. And so how that manifests itself in the marketplace will be another piece.

What I think we would be signaling right now is, there is a strategic challenge. It's a strategic challenge that will come with opportunities, and we're going to spend time and effort on it to ensure that we're both on top of those strategic opportunities and challenges and also, we would work hard to make sure we participate in some way. Either through the Maritime system or through other systems, depending on how the gas actually flows. So, that's really all we're signaling in this effort. But it is a long time effort, it's not something that's going to happen tomorrow, but I guess you would be familiar with the fact that almost all of the projects that we would engage in are generally longer term projects.

Okay. I stay tuned. Thanks for that.

Thank you, Paul.

Your next question comes from the line of Andrew Kuske, from Credit Suisse. Your line is open.

Thank you. Good afternoon. I guess the first question could either go to Chris, Scott or Judy, and it's just really on how you think about the kind of quarter you had in the energy trading business. If your guidance over the year is 15 to 20 and obviously you had a really good quarter, the implication you essentially de-risk a little bit of the book in the last nine months the year, or is it really business as usual? And then the related question is, when you have these kinds of outside gains in the quarter from just the weather conditions and everything else that happen in your asset positioning, do you look at that excess cash as something you just plow back into your core businesses for reinvestment?

Andrew, thank you for the question. I think first of all just address the risk issue. We don't and haven't changed the risk profile of the business at all. It is back-to-back business, and I think what we have said publicly is that we are taking more and more transportation positions. But clearly the downside on those transportation positions is very much capped. And so, that's the kind of work that we're doing. I think Judy pointed out earlier that the priority for the business is developing customer relationships and producer relationships that allow us to be in a position to help people move gas around the region, and we do that by taking transportation positions.

So that's kind of the model that we're following, and it's worked well. It is a reasonably low risk model, and I think it's also reasonably predictable from any down side that might exist. Just to that point, I don't think there's a risking or de-risking of the book. I think the book is very much has the same risk profile all the time. And that has worked well for us, and we've developed both the front and back office capacity to be able to do that in a good way. So, that's kind of the first thing. Clearly, though, there is a lot of cash generated by the business, and that's going to be helpful. We have a lot of projects in front of us, and we will deploy that cash into those projects, and that will help our financing. And will help us as we go forward. Scott is there anything you want to add?

No I think that's right. It all forms part of the -- it's not that cash is treated any different. It provides additional cash, and therefore equity for us to continue to finance our growth internally and our objective continues to be to fund as much of our growth internally as we can and look to capital markets beyond that and this certainly helps.

Okay. That's helpful. And I guess just one of the focal points for the cash in the next two years is really the transmission projects. If you could just give us perhaps a bit of an update as to the progress on the transmission building right now? I know you gave a little bit on the commentary, but, where we are and, obviously, there's been some overtures made by Nalcor into some of the states in the USfor further hydro capacity beyond sort of Phase 1 of Muskratand just how you see yourself fitting into that equation on a longer term basis.

Yeah, I would hope that it would be obvious that those activities in the USare not just Nalcor, but Emera, too. And so you know, I think first and foremost if we look at the project that we have on the go, our priority is getting that project done on time and on budget. And, you know, at this point we feel very good about both of those things. For this year, what the project team is doing is getting contracts in place that will see upwards of 70% of the project fully contracted on a very predictable basis. And so as I said in my remarks, we're actually seeing lots of competition in the marketplace for those contracts and for those projects.

You know, no different than with the cable supply. We saw three world class cable supply companies engage in that activity, and we picked one and went forward with what we think was a very competitive situation. We're finding the same thing on the converter and substation supply and we're finding the same thing on the transmission supply. So all of that is going well, and we feel good about how that bodes for the project as it goes forward. Still early days as you can imagine but the indications are favorable at this point. With that all said, you know, we are under construction. We've done line clearing. As we sit today we're beginning site preparation. We will continue to work in that era. We'll be doing geotechnical work on the crossing itself, and that kind of thing this year.

And so, you know, all of that activity moves forward, and we expect to actually have some of the transmission lines under construction likely by the end of the year. So, that's really where we are, and that is the priority. As it relates to New England, there's an awful lot of change happening in the New England market right now, and I think, you know, it's somewhat I would say sparked by all of the activity that we were just talking about relative to gas supply and so on. But it's also sparked by their desire to move forward with the GHG plan at the lowest cost to customers.

We continue to be focused on being able to provide infrastructure, things like the NEL and other types of projects we believe will be critically important to that kind of infrastructure and doing it in a low cost fashion. Our investment First Wind, our investment in Transmission are partnership with Nalcor, all are very, very important to moving to the next step. And so that's something we're focused on, as well.

Okay. That's great. Thank you.

Thanks, Andrew.

Your next question comes from the line of Robert Kwan, from RBC Capital Markets. Your line is open.

Thank you. Chris maybe I can start with some of the comments you were just making around the collection of assets you've been able to put together. You've been pushing for NEL for some time but the way you kind of built up some of the assets to help back that line, can you talk about some of the developments in New England how you see NEL moving forward and the potential time line for events?

I think it's one of those things where it's going to require essentially a solution, and I think if you look at the way that the legislation in Massachusetts is beginning to evolve, it is that they are looking for a solution. I think people understand that transmission and supply will both have to be involved in that, and so the fact that we now have a portfolio of very flexible assets in that marketplace, whether you talk about the pump storage facility we have or you talk about the gas fired generation, or the wind in that market, those are all important components, I think, to being able to have a good offering. We're well positioned in the state of Maine from a transmission development perspective, whether that be a DC or AC.

And you know, I think that all is on the table. And we continue to build very close relationships with suppliers, so that we're able to come up with an offering that is of a scale that will allow it to work for Massachusetts and to be cost competitive for customers there. Those are the pieces that have to come together. We've been working on that supply side now since about 2007, 2008, when we recognized that it was going to require not just transmission, but clear line of sight to supply for people to be comfortable that they will achieve the kind of savings that can be achieved if we put that kind of incremental transition infrastructure in place. So, again, there will be activities on the alternating current side, there will be activities on the DC side, and there will be continue to be a lot of work on supplies. Those are the things that will have to come together to make this work.

And, I guess Chris, as you're having the discussions with the policy makers, it seems like historically and maybe even now, it's been set up for framework and let the market decide and, arguably things have moved pretty slow. Do you have any sense that there's a greater willingness for government to get involved in actually trying to bring some of these forward a little bit faster and get the parties altogether?

Well, it seems to me that that's the intent of most recent consultations that have been done in Massachusetts. We certainly presented. We know that Nalcor presented, and we know that First Wind presented to the committee consultation that was going on. And so, as always, we have confidence in the processes that are brought forward, and you know, the signs are good.

Okay. If I can just switch back to the energy marketing side. Judy, as you look at how that business has grown in the evolution, or the increase in the guidance, and then also as you think as that grows as you go forward, can you just talk about what you think the biggest contributors are? Whether that's the new infrastructure that you put in place and the ability to market around that? Has it been just more staff, more capital, or has it been the business development opportunities and getting just more customers in the door?

So, I would say it's generally a combination of all those factors. So the business would be strongly of the belief that it has had the success it's had because it has made itself experts before it took big steps or, you know, moved majorly into new markets. So, I look at the Marcellus supplier relationships we have. We basically did go into that market and knock on doors, and started out with a few very small deals, so we could get an understanding of the marketplace there and the pipeline infrastructure, and gradually got a little bit more comfortable so that we made it, you know, kind of a little bit of a bigger piece in the overall portfolio. But we're basically moving down through the northeast and now a little bit kind of west, kind of pipeline leg by pipeline leg.

So we do a lot more at [dawn] now than we did previously. We're down as far routinely into New York, and PJM to some extent, so we now have four kind of commercial facing gas traders. We brought one in, and we grew the rest of them. So, they started out in our gas scheduling group, which makes them experts in the region that we are trading in, and they understand Emera's risk appetite. So, we're still in a circumstance where we're able to kind of be bigger but yet maintain the same kind of risk profile and the control elements that we've always had. So I would kind of say that's where the growth has come really, you know, one customer and one leg at a time.

And I think, Judy, it's fair to say the front office maintains customer relationships both on the producer side and on the customer side, or the consumer side,and the back office actually is built more and more resources around the ability to schedule. And that has really been an important part of our capacity to move this gas around when it needs to be moved. And so, as Judy said, the biggest thing we're doing is growing the capacity of the organization by adding people and growing people.

Actually, just to finish on that, the roughly 5% growth rate that you put forward, is that a function of the kind of physical constraints whether that's Human Resources or infrastructure scheduling, as you said, Chris? Or, is that strategically just a desire to try on grow that business in lock step with the overall 4% to 6% earnings guidance?

I would say it's more based on the fundamentals of the business, and what I think is our ability to kind of absorb and expand profitably and smartly.

Okay. That's great. Thank you.

You know me, I'm not too -- I'm not an optimist, Robert.

Okay. Thanks, Chris. Thanks, Judy.

Thanks, Robert.

And again that is star one if you would like to ask a question. Your next question comes from the line of Matthew Akman, from Scotiabank. Your line is open.

Thanks very much. I think, Chris, you spoke in your opening remarks about some alternative fuels in the Caribbean, and you talked a little bit about solar. I was wondering if I think I heard you mention something about natural gas in Barbados I was wondering if you did say anything about that and whether your C and G plans are advancing?

Yes, Matthew, they certainly are. If I start in the north, we have an application before the department of energy in the United States to export gas from Florida into the Bahamas. We are working to advance that. That's the kind of process that we'll still take months or maybe more than a year for it to unfold. So, we've gone through and finished the engineering, so we've actually finished all the front end engineering necessary to know exactly what it is that we would build, and now we need permits.

So that's really where we are right now. If we were successful to get an export permit from Florida, we would be building that project at the time that were to happen. So, really, that's where we are. I think we filed documents with the [FERP] recently looking for a declaratory order relative to their jurisdiction in the situation. We're hopeful that project will continue to move forward. As it relates to Barbados, again, we're doing two things there. We're adding clean energy directly in the form of solar both utility scale and from a rooftop perspective.

You know, there's a lot of small plants that are being added in that market. We're working very, very hard to get a wind farm up and running, and we believe that that's going to be possible there sooner it rather than later, although things will help take fuel exposure away from that country and a combination of oil exposure and foreign exchange exposure is one of the things that we're working to do there. And then lastly, we need to get an allocation of gas for that market. We're hopeful that will be possible from the Trinidad marketplace, and if we can get an allocation of gas then we would be moving gas out of Trinidad into Barbados. And that's really characterizes what our plans look like right now.

And in Barbados, that would just be for the account of the utility asset you own as opposed to for some other infrastructure investment down there?

Well there is a gas company that's owned by the government in Barbados, and we would expect that gas company would be interested in taking gas, as well. And so if we brought gas to that market, we would scale the project to supply the entire market, and you know, there probably is a longer term growth for gas use in the Barbados market. And you know, don't forget we're in Saint Lucia, as well, and there's a fairly substantial amount of diesel fired generation there that could easily use gas.

Okay. Thanks for that. Sorry to beat a dead horse but I have a bit of a different question on the energy marketing and trading. It's almost when pries get very high it's almost like they get too high because inevitably you get political backlash in these situations, especially when you're dealing with something related to electricity or gas which people see as necessity of life. And I'm wondering, Chris, from your perspective, strategically, you know, is there a point where you want to almost back away from that business because even though you're not doing anything to sort of manipulate a market you're potentially risking the corporate reputation getting swept up in that?

Well, so I think, Matthew, we're very encouraged by what we see, as I said earlier, that the New England governor's are focused on. You know, we would see ourselves as providing a service, and that service would certainly be helping people acquire gas they might not otherwise be able to acquire. And so that's a very big part of what we do, and we do need people in the marketplace doing that. But from a longer term perspective, we're quite encouraged by what's being discussed in New England right now with the idea that a billion cubic feet of additional transport might be added to the existing electricity system, and therefore provide that much more access to lower cost gas in that market.

So, you know, again, I think that our organization is doing what it always does. It's working hard to provide solutions to customers, whether they be, as Judy says, one pipeline leg and one customer at a time, be the producer that may be looking at molecule on molecule competition. You know, if you go back in time, we said one of the reasons we wanted to buy those gas plants was because we would see the opportunity to provide some of our producer customers with molecule on electron opportunities as opposed to just molecule on molecule competition. So, those are the kinds of things that I think will help provide solutions to the market and continue to make things better in the market that is quite congested as we sit today.

Okay. Thanks very much, guys. Those are my questions.

Thank you, mat.

There are no further questions at this time. I'll turn the call back over to Chris Huskilson.

Okay. Thank you very much. And thank you for your participation in the call today and your interest in Emera. I just would like to remind people that Emera's AGM is tomorrow at Queen's Place Emera Center here in Liverpool. It will begin at 2^00 Atlantic, and will be available via webcast. With that, hopefully, many of you will be able to join. Have a good afternoon.

Ladies and gentlemen, thank you for your participation. This concludes today's conference call and you may now disconnect.